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If you want flexibility, wide format support and a nice interface, then an HTPC is your best bet. I know people who use the Acer Aspire Revo R1600 ($200) for their HTPC and it seems to work quite well even for HD. Myself, I'd opt for the dual-core Revo R3610 model ($329), at least. The built-in Windows Media Center in Windows Vista/7 works well enough, particularly when paired with MyMovies or Media Browser.